Employer vs Individual Disability Insurance Policies

Employer disability insurance policies, also known as group policies, and individual disability insurance policies are very different for doctors.

There are four major downsides to relying only on your medical professional employer's group coverage:

1. The Employer policy is taxable!

As we discussed above, your individual disability benefit is not taxable, but your employer benefit is!

This means that if you have to use your employer policy, the money you'd receive would be taxed, leaving you with WAY less than your current take-home pay.

Which would impact your lifestyle as you'd have to adjust to your new "salary" relying on your employer's disability coverage.

2. Employer policies are typically NOT true own-occupation.

This is a must for physician disability insurance policies. Most of the time, employer policies are going to be any-occupation, which is completely unreliable because the definition is extremely restrictive to doctors.

That means if you are able to work in any other position, you won’t meet the definition of disabled and won’t receive your benefit.

Under an any-occupation policy, you’re only considered disabled if you can’t work in any occupation that you could be considered reasonably suited for based on education, training, or experience.

This means if you break your hand and are unable to perform your duties you would not be considered disabled because you could still work as a librarian or receptionist.

3. Employer policies are non-transferable.

This means that you can’t take them with you if you decide to leave your employer.

If you’re early in your career, chances are that you will move to a different employer before the end of your medical career.

If you do, you won’t be able to guarantee that you’ll have disability insurance at your new position.

If you opt out of getting an individual policy and switch employers, this could leave you in a bad position.

You’d no longer be insured through the employer policy and chances are your rates would have gone up over time, leaving you with an expensive premium.

4. Your employer can cancel or change it at any time.

It is important to remember that an employer policy is not owned by you, meaning your employer has complete control over the policy.

If they wanted to cancel or change it at any time, there is nothing you would be able to do.

If in the future your employer cancels the physician group policy, and you were relying on that policy, it could leave you in a bad situation for getting your own policy if your health has changed.

When you are talking about your financial stability, you never want to leave that in someone else's hands.

For all the reasons above, we strongly recommend that you get your own individual policy to better protect yourself and your finances as well as save you from the grief of being caught in a situation unprepared.